Continental Datalabel, Inc v. Avery Dennison Corporation

Plaintiff Continental Datalabel, Inc., and Defendant Avery Dennison Corporation are manufacturers of self-adhesive address labels. Continental alleges in this suit that Avery infringed Continental's patents in violation of federal patent law, engaged in unfair competition through false or misleading advertising in violation of the Lanham Act, and violated Illinois common law by tortiously interfering with Continental's efforts to sell its labels to office supply retailers Staples and Office Depot. The court stayed the patent claims pending a reexamination of Continental's patents by the U.S. Patent and Trademark Office ("USPTO"). Doc. 43 (Shadur, J.). The reexamination proceedings are ongoing. Doc. 293.

Continental now asks the court to reconsider its orders granting summary judgment to Avery and entering a partial final judgment. Doc. 277. The motion is directed to the court's grant of summary judgment on the Lanham Act claim; the motion does not challenge the grant of summary judgment on the tortious interference claim, and nor does it argue that the entry of partial final judgment under Rule 54(b) was improper if the court's ruling on the Lanham Act claim was correct. The court received a response brief from Avery and a reply brief from Continental, Docs. 286, 291, and heard oral argument, Doc. 296. The reconsideration motion is denied on the ground that Continental, during briefing on the summary judgment motions, could have but failed to raise the arguments it now makes, thus forfeiting the arguments.

Some background, drawn from the court's summary judgment opinion, will put Continental's reconsideration motion in context. In 2008, Avery began to market a line of "Easy Peel" adhesive address labels that were designed so that the user, by folding the sheet of labels, could cause the edges of the column of labels to pop away from the adhesive backing sheet. This feature is desirable because the label is easy to grip and peel off once its edge has popped up from the backing sheet. Continental claims that its own line of labels, the "FastPly" labels, had the same feature. Although Avery disputes this, the court assumed for purposes of summary judgment and will continue to assume that both companies' labels possessed the relevant feature.

Beginning with the introduction of its Easy Peel line in 2008, Avery advertised the labels with the following two statements, referred to as the "Only Avery" statements: "Only Avery label sheets bend to expose the Pop-up EdgeTM" and "Only Avery offers the Pop-up EdgeTM for fast peeling-just bend the sheet to expose the label edge." By including the trademark symbol ("TM"), the "Only Avery" statements indicated that Avery claimed a common law trademark on the phrase "Pop-up Edge." See USPTO, Should I register my mark?, available at http://www.uspto.gov/trademarks/basics/register.jsp ("Any time you claim rights in a mark, you may use the 'TM' (trademark) . designation to alert the public to your claim, regardless of whether you have filed an application with the USPTO.") (visited Apr. 18, 2013). At some point, Avery applied to register the trademark with the USPTO, which granted the registration in 2010. In this suit, Continental alleged that (1) the "Only Avery" statements assert that only Avery's labels could be folded to expose the labels' edges without having to be torn, (2) Continental's FastPly labels also possessed this feature, and (3) the "Only Avery" statements were therefore false or misleading in violation of the Lanham Act, which prohibits misleading advertising. See 15 U.S.C. § 1125(a)(1)(B).

The court rejected proposition (1), and so it granted summary judgment to Avery. In reaching that result, the court held that no reasonable juror could conclude that the "Only Avery" statements were "literally false" and also that Continental had failed to produce sufficient evidence of actual consumer confusion from which a reasonable jury could find that the "Only Avery" statements, even if not literally false, were misleading. 2012 WL 5467667, at *3-7. Continental's reconsideration motion attacks only the holding on literal falsity.

As noted in the summary judgment opinion, precedent holds that "[a] 'literal' falsehood is bald-faced, egregious, undeniable, over the top. . The proper domain of 'literal falsity' as a doctrine that dispenses with proof that anyone was misled or likely to be misled is the patently false statement that means what it says to any linguistically competent person." Schering-Plough Healthcare Prods., Inc. v. Schwarz Pharma, Inc., 586 F.3d 500, 513 (7th Cir. 2009). Applying that standard, the court concluded that the "Only Avery" statements were not literally false because a linguistically competent person could read the statements to assert not that Avery alone offered the generic feature of labels whose edges pop up when the backing sheet is folded-which would be false if, as the court assumes, Continental's FastPly labels had that same trait-but merely that Avery alone marketed the feature under the trademarked phrase "Pop-up Edge." By the same token, the court explained, the use in advertising of other trademarks that are descriptive rather than abstract does not give rise to literally false statements: a McDonald's advertisement claiming that "the Quarter Pounder® is available only at McDonald's" would not be literally false even if other fast food chains also offer hamburgers with quarter-pound patties, even though an advertisement claiming that "only McDonald's serves hamburgers with quarter-pound patties" would be literally false. 2012 WL 5467667, at *5; see also LensCrafters, Inc. v. Vision World, Inc., 943 F. Supp. 1481, 1498-99 (D. Minn. 1996) (holding that LensCrafters had not engaged in literally false advertising in claiming to be the exclusive seller of "Featherwate" eyeglasses lenses, even though the Featherwate lenses were physically identical to other lightweight polycarbonate lenses offered by other sellers unaccompanied by the Featherwate trademark).

In concluding that the "Only Avery" statements were not literally false under ScheringPlough, the court acknowledged that they might nonetheless be ambiguous and misleading to consumers. 2012 WL 5467667, at *6. But applying precedent requiring a plaintiff to present evidence of "actual consumer confusion" to show that a statement that is not literally false is nonetheless misleading, see B. Sanfield, Inc. v. Finlay Fine Jewelry Corp., 168 F.3d 967, 972 (7th Cir. 1999), the court held that the consumer survey evidence proffered by Continental was insufficient and that Avery was therefore entitled to summary judgment, 2012 WL 5467667, at *6-7. As noted above, Continental requests reconsideration only of the court's conclusion on literal falsity; although its reconsideration motion briefly refers to the consumer survey evidence, Doc. 277 at 5-6, the reference merely rehashes arguments already addressed in the court's summary judgment opinion.

The basis for Continental's challenge to the court's ruling on literal falsity is Continental's new contention that Avery did not in fact have even a common law trademark on the phrase "Pop-up Edge" during the relevant time period. Continental argues: (1) that the phrase "Pop-up Edge" is descriptive; (2) that descriptive phrases become susceptible to trademark protection only after acquiring a "secondary meaning" in the minds of consumers, see Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769 (1992); (3) that the phrase "Pop-up Edge" could not have acquired secondary meaning as of the time that Avery began using it in 2008, or indeed for some time thereafter; (4) that Avery therefore did not have a valid trademark on the phrase during at least some portion of the relevant period of 2008-2009; and (5) that the court therefore was wrong to say that the trademark laws prohibited Avery's competitors from using the phrase in their own advertisements. Continental's arguments raise difficult issues. But the court will not resolve the merits of those arguments because Continental should have presented them on summary judgment yet failed to do so, thereby forfeiting them for purposes of its reconsideration motion.

While Continental's motion invokes Rules 59(e) and 60(b), the court construes the motion as one under Rule 59(e), which provides that "[a] motion to alter or amend a judgment must be filed no later than 28 days after the entry of judgment." See Seng-Tiong Ho v. Taflove, 648 F.3d 489, 495 n.5 (7th Cir. 2011) (construing a similar motion ostensibly brought under Rule 60(b) as coming under Rule 59(e)). "Courts may grant Rule 59(e) motions to alter or amend the judgment if the movant presents newly discovered evidence that was not available at the time of trial or if the movant points to evidence in the record that clearly establishes a manifest error of law or fact. This rule enables the [district] court to correct its own errors and thus avoid unnecessary appellate procedures. But such motions are not appropriately used to advance arguments or theories that could and should have been made before the district court rendered a judgment, or to present evidence that was available earlier." Miller v. Safeco Ins. Co. of Am., 683 F.3d 805, 813 (7th Cir. 2012) (citations and internal quotation marks omitted); see Innogenetics, N.V. v. Abbott Labs., 512 F.3d 1363, 1371 (Fed. Cir. 2008) ("We review procedural issues not unique to patent law under regional circuit law. Absent extraordinary circumstances, the Seventh Circuit has stated that it rarely reaches forfeited arguments in civil litigation.") (citations omitted). Avery argues that Continental's motion does not meet this standard because its evidence and arguments all could have been presented during the summary judgment stage. Avery is correct.

Continental advances several contentions as to why it should not be faulted for failing to present on summary judgment its argument that Avery's asserted common law trademark had been invalid during the relevant time period-that is, the period prior to the USPTO's registration of the mark in 2010, which registration Continental does not challenge. First, Continental suggests that it did raise that argument on summary judgment when it maintained that "placing a trademark symbol next to a false statement, or part of it, does not make the statement any less false. For purposes of false advertising, a descriptive trademark carries the same meaning as the descriptive word or phrase devoid of the mark." Doc. 291 at 4 (quoting Doc. 203 at 71-72). But that argument is entirely distinct from the one Continental now raises. In the quoted passage, Continental argued that if the "Only Avery" statements would have been literally false had Continental not accompanied them with the common law trademark symbol, then the addition of that symbol could not make them any less false. That argument took as given that the phrase "Pop-up Edge" really had been a valid trademark, or at least had been presented as an Avery trademark through use of the "TM" symbol, but submitted that the phrase's being a trademark was legally irrelevant to the literal falsity inquiry. Now, by contrast, Continental submits that the phrase did not qualify for trademark protection. The argument that Continental actually made at summary judgment cannot be stretched to encompass its present contention, meaning that Continental failed to make that contention on summary judgment.

Continental next asserts that it could not possibly have raised its present contention at summary judgment because Avery had not put Continental on notice that the trademark status of the phrase "Pop-up Edge" prior to the USPTO's registration of the trademark was relevant to the summary judgment motions. (This assertion is in obvious tension with Continental's suggestion that it did argue that the trademark was invalid on summary judgment, but that tension will be set aside.) Continental points out that although Avery asserted numerous times in its briefs and Local Rule 56.1 statement that it had a valid trademark on the phrase "Pop-up Edge," those assertions were phrased in the present tense; according to Continental, this led it to think that Avery was referring only to the present moment (that is, March 2012, when Avery filed its summary judgment brief), and not to the 2008-2009 period at issue in the suit. For instance, Avery argued in its summary judgment brief that:

The "Only Avery" statements that are the basis for Continental's claim all clearly indicate that "Pop-up EdgeTM" is a trademark owned by Avery through consistent use of the trademark (TM) symbol. Avery's common-law and federal trademark rights, in fact, give Avery the exclusive right to use the trademark "Pop-up Edge" in relation to label sheets. As such, it is ...

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